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Turns out many of the newly insured are obtaining health insurance for the first time in their lives. They don’t understand deductibles and copayments and they don’t understand why they should have to pay premiums when they are healthy – especially when they used to get care for free.

This may be one of the reasons that Aetna is experiencing a big drop off in enrollment so far and is expecting more drop off in the future:

“The nation's third-largest health insurer had 720,000 people sign up for exchange coverage as of May 20, a spokesman confirmed to [Investor’s Business Daily]. At the end of June, it had fewer than 600,000 paying customers. Aetna expects that to fall to "just over 500,000" by the end of the year. That would leave Aetna's paid enrollment down as much as 30% from that May sign-up tally.”

Photo Credit: USA Today

Aetna’s experience may be part of the reason why the administration is so tight lipped about the actual enrollment numbers. As Peter Suderman reports:

“The Obama administration stopped releasing monthly enrollment reports for Obamacare in May, and won't say if or when those reports will start up again.”

Underlying all this is the fact that millions of newly insured people didn’t understand what they were buying, even though their premiums are being heavily subsidized. As Lena Sun, writing in the Washington Post, reported last month:

“Nonprofit organizations across the country are being swamped by consumers with questions. Many are low-income, have never had insurance and have little knowledge of the health-care system. The rampant confusion poses a potential hurdle for the success of the health law: If many Americans don't understand how health insurance works, that could hurt their ability to use their benefits - or to keep their coverage altogether.”

“So what you’ve got is an insurance industry that did not do a good job in gearing up for a population that has never had health insurance before, an Obama administration that did a horrible job on the back end, resulting in a flood of calls to insurer call centers, and a population that is low-income and is not health-insurance literate. Put those things in a bag and you’ve got a problem.”

All this may serve to remind people that there is a reason why the health insurance marketplace used to have brokers. They do for individuals and small groups what HR departments do for employees of large companies. Even well-educated, upper income folks have difficulty negotiating the byzantine world of health economics. Sooner or later, most of us need help.

The big mistake of the Obama administration is in believing that health insurance could be like airline tickets and hotel rooms – easy to understand and amenable to online sales without third-party (human) intervention. They hired “navigators” to encourage people to sign up, but didn’t believe that brokers played any essential role.

Beverly Gossage points out that Blue Cross typically sells individual policies directly to buyers for the same premium as policies sold through brokers (who get a 9% first year commission). The reason? Even though direct sales have no brokerage fee, the company assumes the buyers will still require “brokerage-type services” that are not inexpensive to provide.